subject: Healthcare Costs Moving Up on Auto Pilot [print this page] Recently, HealthGlobe CEO Jeff Carter attended and spoke at the CFO Core Concerns conference hosted by CFO Magazine. Jeff was able to have lengthy discussions about health care benefit costs and strategies with CFOs from a number of different industries across the country. These conversations gave me some valuable insight into how health care costs continue to escalate unchecked by speaking with the people who figure out how to pay for it: Corporate CFOs.What amazed Jeff was that most of the people I spoke with simply allocated a 15-25% trend increase in health care costs into their annual budget projections. No questions asked, that's just the way it has to be.
Um. Why? Shouldn't CFO's and Human Resources professionals try to find another way?
When any other vendor walks in with a 15% annual cost increase year after year, there is always at least an evaluation of other vendors to gauge whether better pricing is possible, or even simply to get some pricing leverage against the vendor. But it seems that in the world of health care, benefits are such a sacred cow that companies basically tweak two variables only: employee contributions and co-pay levels.
Frankly, it becomes pretty difficult to blame "the system" for the unending cost increases. If you asked for a 15% raise every year and every year you got what you asked for, why would you ever stop asking? You'd probably just keep asking for as much as you think you can get. So why wouldn't insurance companies do the exact same thing?
Jeff does not suggest that if companies started pushing back that there would be a collapse in medical cost increases, only that it is rather shocking that they are not pushing back and forcing a long-term change in the efficiency of the system. Here are my two key observations:
BE CREATIVE!! - When your top line revenue or your bottom line profit numbers do not come in the way you had projected, what do you do? You roll up your sleeves, get your best team members in a room and start thinking creatively until you fix the problem. Well, raising employee contributions and co-pays is certainly not very creative. Put strong incentives in place for your employees to consider the cost of their consumption. Medical Travel Benefits are a great place to start, and can probably provide the most significant immediate savings, but there a whole number of ways to reduce your health care exposure.
HealthGlobe was able to present a 700 life self-funded group with a 10% year-over-year DECREASE in their stop-loss premium this year because they were using aMedical Travel benefit. That's before they save money on any claims processed through the HealthGlobe Network. One more time, that's a year-over-year *reduction* in fixed costs. Contact HealthGlobe if you are interested in learning more about how you can slow the growth of the healthcare benefits you provide your employees.
